Thai Tycoons Top Dealmakers With Record Spending: Southeast Asia

Charoen Pokhpand Group Co.’s $9.4
billion purchase of a stake in China’s Ping An Insurance (2318) (Group)
Co. puts Thai companies and their billionaire owners among the
ranks of Asia’s biggest overseas acquirers.

The record $25 billion of Thai purchases abroad announced
so far in 2012 is more than in the previous 12 years combined
and behind only Japan and China in the Asia-Pacific region, data
compiled by Bloomberg show.

Thai companies, recovering from last year’s floods, are
starting to deploy the cash they’ve built up since the country
became a flashpoint for Asia’s financial crisis 15 years ago.
With billionaire Charoen Sirivadhanabhakdi attempting a $11.4
billion takeover of Singapore’s Fraser & Neave (FNH) Ltd., Thai
acquirers are now involved in two of the four largest cross-
border deals by Asian companies this year.

“There are companies in Thailand that have strong domestic
market positions that are now at an inflexion point, where they
need to decide whether to build a pan-Asian footprint or choose
not to be part of the game,” said Philipp Lotter, an analyst at
Moody’s Investors Service in Singapore.

Billionaire Dhanin Chearavanont has built CP Group into a
global business with operations in agriculture, retailing,
trading, telecommunications, property development and
petrochemicals, employing more than 250,000 people. Along the
way, he amassed a $6.2 billion personal fortune, according to
the Bloomberg Billionaires Index.

Shifting Priorities

Dhanin, 73, will buy HSBC Holdings Plc (HSBA)’s 15.6 percent stake
in Ping An in two phases, with the first to be completed by Dec.
7, according to a statement yesterday. CP Group says on its
website that it became the first major foreign investor in China
in 1979 after Deng Xiaoping started free-market reforms.

The acquisition spree underscores how Thai companies are
moving from being low-cost producers of export goods to trying
to take advantage of buoyant demand in Asia, said Alan Richardson, a Singapore-based fund manager who helps oversee
about $82 billion for Samsung Asset Management.

Cash Stockpile

“You’re now seeing the model of companies trying to grow
demand within Asia rather than creating exports for western
markets,” said Richardson. “They have a lot of cash available,
and until now there’s been almost no expansion since the Asian
financial crisis.”

Cash held by Thai companies has quadrupled in the past
decade, according to data compiled by Bloomberg. Total cash
holdings of the 422 non-financial members of the Bangkok SET
Index (SET) for which data is available reached $18 billion as of
Sept. 30. The companies held about $4.4 billion in cash at the
end of 2002, the data show.

In 1997, Thailand triggered the Asian financial crisis when
it devalued the baht to shore up a faltering economy, abandoning
its policy of pegging the currency to the U.S. dollar. Investors
sold Asian stocks and currencies, causing neighboring economies
including Malaysia and Singapore to shrink, and leading
Thailand, South Korea and Indonesia to seek bailouts from the
International Monetary Fund.

Dhanin’s investment in China’s second-largest insurer marks
a departure in the country for Thai companies, which
traditionally viewed it as an export market according to Credit
Suisse Group AG. (CSGN) Before the deal, his only insurance asset was a
joint venture in Thailand with Germany’s Allianz AG.

The value of overseas acquisitions by Thai buyers averaged
$379 million annually from 2000 to 2009, data compiled by
Bloomberg show. Deals jumped to $7.3 billion in 2010 and slipped
to $5.9 billion last year, according to the data.

State-controlled PTT Pcl (PTT), Thailand’s biggest energy company
and the parent of PTT Exploration, led acquirers with $5.7
billion of deals since 2010, the data show. That tally includes
PTT Exploration’s takeover of Cove Energy and an acquisition by
PTT Global Chemical PCL.

Financing Deals

Both CP Group and Charoen are using Asian lenders to fund
part of their deals. CP Group will tap state-owned China
Development Bank Corp., according to HSBC. Charoen’s Thai
Beverage held talks with about six banks, including lenders from
Singapore and Malaysia, for financing of its acquisition, people
familiar with the matter said in September.

To pay for its purchase, PTT Exploration raised about $3.1
billion in Thailand’s largest stock sale on Nov. 30, as the
benchmark SET Index rose to its highest in more than 16 years.

The acquisitions by Thai conglomerates this year also shows
their wealthy owners seeking to move money out of the country
amid lingering political unrest, said Justin Harper, a
strategist at IG Markets in Singapore.

“Enormous wealth has been created there and tycoons and
billionaires are keen to get some of their money out of Thailand
for diversity and political risk,” Harper said. “We’ve been on
the receiving end of a lot of Thai money coming out into other
parts of Asia.”